By John Shaw

WASHINGTON (MNI) – If the U.S.’s fiscal predicament could be solved
by letters and statements from business leaders urging Congress and the
administration to enact comprehensive deficit reduction legislation the
U.S. would be well on its way to a balanced budget.

While such correspondence doesn’t actually solve the nation’s
fiscal problem it does put pressure on lawmakers and the president to
address the nation’s fiscal problems.

Put negatively, these letters remind policymakers that an important
group is looking over their shoulders, demanding that they act to
address a serious problem.

Put more positively, these statements tell policymakers there is a
constituency supporting their efforts to take the hard steps needed to
confront the U.S.’s deficit problem.

Another business group issued a statement Thursday urging Congress
and President Obama to tackle the budget deficit through significant
entitlement and tax reforms.

The statement by 80 CEOs of major companies says that a credible
deficit reduction plan must reform Medicare and Medicaid, limit the
growth of health care costs, strengthen Social Security, and “include
comprehensive and pro-growth tax reform, which broadens the base, lowers
rates, raises revenues and reduces the deficit.”

The statement says the Simpson-Bowles plan offers an “effective
framework” for tackling the deficit. The Simpson-Bowles plan calls for
$4 trillion in deficit reduction over a decade through a 3-to-1 mix of
spending cuts and tax increases.

The most recent CEO statement was organized by the “Fix the Debt”
campaign, which is encouraging a major deficit reduction effort after the
elections.

Last week, the leaders of the U.S.’s top financial services
companies sent a letter to President Obama and congressional leaders
urging them to negotiate a compromise that averts the fiscal cliff and
restores the nation to a credible fiscal policy.

The letter implored the White House and Congress to “work together
to reach a bipartisan agreement to avoid the approaching ‘fiscal cliff’
and take concrete steps to restore the United States’s “long-term fiscal
footing.”

The letter was signed by Lloyd Blankfein of Goldman Sachs, Michael
Corbat of Citigroup, Jamie Dimon of JP Morgan Chase, Brady Dougan of
Credit Suise, James Gorman of Morgan Stanley, Brian Moynihan of Bank of
America and other private sector financial leaders.

“But merely avoiding the fiscal cliff is not enough. We further
urge you and your colleagues to enact legislation that truly restores
the nation’s long-term fiscal soundness,” they wrote.

They argued that the consequences would be “very grave” if there is
no action to improve American fiscal policy with a major deficit
reduction package.

“We urge you to negotiate a bipartisan agreement as soon as
possible,” they said.

Leaders of other business groups have also urged the White House
and Congress to avoid the fiscal cliff and negotiate an ambitious
deficit reduction package.

Bob Bixby, the executive director of the Concord Coalition, says
letters such as these can help create a context for tackling budget
challenges.

“I think these letters can be an effective way for the business
community to say they expect policyamkers to act on the deficit after
the election. For those so inclined to do the ‘right thing’ and step up
to the plate, it gives them encouragement. For those inclined to do the
‘wrong thing’ and head for the hills, it tells them that an important
community is watching closely,” Bixby says.

Bixby said the U.S. business community was passive for many years
on fiscal issues, but has become far more engaged and vocal in the last
year.

“It used to be that the business community assumed that Congress
and the White House would do reasonably rational things
eventually — after all the posturing and game playing was done. But the
2011 debt ceiling crisis changed that. They now realize that there are
people in Congress who are unwilling to compromise even if it hurts the
country. The fiscal cliff only intensifies that concern,” Bixby says.

The fiscal cliff refers to the convergence of several significant
events: the expiration of the Bush-era tax cuts and dozens of other tax
provisions at the end of this year; the first round of across-the-board
spending cuts that are scheduled to begin in January; and the need to
increase the statutory debt ceiling in the coming months.

The Gang of Eight, a bipartisan group of eight senators, continues
to draft a deficit reduction package of about $4 trillion over a decade,
the outlines of which will be ready for Congress to consider by
November.

President Obama said Tuesday that he’s “absolutely confident” that
if re-elected he will be able to secure a sweeping $4 trillion deficit
reduction agreement.

In an interview with the Des Moines Register, Obama said the fiscal
cliff provides a “forcing mechanism” to bring both sides to the
negotiating table to resolve “what is the central ideological argument
in Washington right now and this is: How much government do we have and
how do we pay for it.”

In the interview, Obama said he believes a big deficit deal can be
reached in the first six months of 2013.

“It will probably be messy. It won’t be pleasant. But I am
absolutely confident that we can get what is the equivalent of the grand
bargain that essentially I’ve been offering to the Republicans for a
very long time,” he said.

“We can credibly meet the target that the Bowles-Simpson Commission
established of $4 trillion in deficit reduction and even more in the
out-years,” the president said.

The Republican presidential nominee Mitt Romney said he would
balance the federal budget in eight to 10 years but has not provided
details on how this would be accomplished.

** MNI Washington Bureau: (202) 371-2121 **

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–email: jshaw@mni-news.com